Cake and biscuits market in slow growth, but future positive

The biscuit and cake market has seen a “subdued” growth, threatened by home baking and competition between confectionery, health foods and ice cream products.

According to Biscuits & Cakes, a market report by intelligence provider KeyNote, the total market value grew by 1.8% in 2014.

As a result, to remain competitive the report said cake and biscuit manufacturers have had to sacrifice profitability in order to invest in new product developments, marketing campaigns and promotional activity.

Despite this minor growth, the report also forecasts that the total UK biscuits and cakes market will exhibit value growth of 9.3% between 2015 and 2019.

It said key drivers in the market were price, convenience and health — with Belvita’s launch of breakfast biscuits in 2010 cited as the most significant innovation of the last five years for the market. In 2014, the healthier biscuits subsector was estimated to be worth £612m, representing value growth of 2.5% from 2013.

In the next few years the report predicts that the demand for premium biscuits and cakes will rise, contributing to value growth.

It also said it would expect a growth in brand crossovers. The report stated: “The growing number of product crossovers is increasingly blurring the lines between established markets in the UK marketplace. As market saturation becomes worse, this trend is expected to develop as manufacturers look to maintain a steady launch of NPDs.

“In January 2015, Mondelēz launched Dairy Milk Oat Crunch — a chocolate and biscuit combination targeted as an elevenses snack — following the 2014 launch of its Dairy Milk with Ritz and Dairy Milk with LU crossovers. These products are enhancing the choice of products at retail, exacerbating the complexity of consumer decisions at PoS.”